A deal which would see investment firm, Greybull Capital acquire Tata’s long products steel plant in Scunthorpe is close to being finalised, it’s been reported.
In late-October 2015, Tata Steel officially announced plans to end production of steep plate by its Long Products Europe business.
According to City AM, Greybull has said to have promised the existing 4,500 workers that there would be no more “redundancies or shutdowns” after Tata’s cull of 1,200 jobs in the autumn – roughly 900 in Scunthorpe, 270 in Scotland and a handful at other sites.
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With both Union officials, the Treasury and the Department of Business, innovation and Skills (BIS) reportedly all approving the deal, there are still several serious aspects of negotiations still to be agreed.
Should something be reached by the March 31 deadline – set by Tata, the deal would be the London-based equity firm’s most prominent to date, following the firm’s reversal of Monarch airline’s fortunes and its acquisition of supermarket chain, Wm Morrison’s 140-strong network of local convenience stores.
Greybull has purportedly committed to investing £400m into Scunthorpe in an effort to overhaul the business, including seeing costs scaled back, and changes implemented to both employee and supplier contracts.
The overhaul is hoped to transform the site’s operation, moving from losses of £100m for the year – on reported revenues of £1.6bn, to potentially pulling in £100m in profit in as little as 24 months.
The UK steel industry has been beleaguered by challenges during 2015 and into 2016, with the shift in market conditions due to a flood of cheap Chinese imports being particularly hard felt, alongside a strong pound and unsustainable energy costs.